Consumption performance was moderate, lead prices will hinge on cost and supply changes this week

This week, China's "Two Sessions" will be held. The market will keep an eye on the policy direction conveyed by the meeting. Key data due this week include the final value of the US Markit service industry PMI in February, the factory orders in January, the number of ADP employment in February, the unemployment rate in February and the seasonally adjusted non-farm payrolls in February. Federal Reserve Chairman Powell will give testimony before the House Financial Services Committee; the Federal Reserve will release the Beige Book of Economic Conditions.

In terms of LME lead, LME lead stocks unexpectedly increased by more than 10,000 mt last Thursday, reaching the latest 181,225 mt, and rising by 7,425 mt from a week earlier. The backwardation of LME cash to the three-month lead contract turned into contango and stood at $1.25/mt as of February 29. In addition, Federal Reserve officials recently stated that they are not in a hurry to cut interest rates and are not afraid of January's inflation data. This year's voting committee reiterated that it may be appropriate to start cutting interest rates this summer. The US dollar fluctuated higher, which suppressed non-ferrous metals. It is expected that LME lead prices will dip this week to $2,030-2,100/mt.

In terms of SHFE lead, supply and demand in the lead market increased after the CNY holiday. Lead smelters resumed production, downstream companies' operating rates climbed, and market trading activity increased. Inventories at primary lead and secondary lead smelters gradually declined, while social warehouse inventories increased again. Inventory accumulation combined with moderate lead consumption will prevent inventory from falling any time soon. However, the supply of raw materials such as battery scrap is tight, the cost is gradually rising, and the lack of profit has caused some smelters to reduce production. Market attention will be paid to changes in raw material supply and costs, as well as the impact of production at smelters on lead prices. The most active SHFE lead contract prices are expected to stand between 15,900-16,150 yuan/mt this week.

The spot prices are expected to move between 15,700-16,000 yuan/mt. In terms of primary lead and secondary lead, smelting enterprises are recovering and overhauling at the same time, and regional differences in the supply of lead ingots may be expanded. New national standard for lead ingots will be implemented in March, and the requirements for elements such as bismuth will be increased. The delivery brands lead can report premiums due to the update of the national standard. In terms of secondary lead, the price gains for battery scrap will prompt smelters to maintain high prices. In terms of lead consumption, the production of lead-acid battery companies has basically resumed, but end-user consumption was weak. Companies generally produced based on sales.